Bookkeeping – Complex Entries (Lesson 15)

Complex Entry

Dual entries may have multiple lines of information, the key is that total debits must equal total credits. When there are more than two lines of data, it is referred to as a complex entry.

Many bookkeepers are initially misinformed about the dual entry accounting system. They think that based on the wording that accounting entries have only two lines of information, one line for a debit and a second line for a credit. What the words ‘dual entry’ mean is that debits must equal credits. Therefore, either or both values can have multiple lines of data. If multiple lines of three or more, the entry is called a complex entry.


This lesson is designed to illustrate this concept. Keep in mind that at the end of the entry all debits must equal credits.

The first illustration is a simple purchase of materials with a discount from the supplier, i.e. cash is paid. The entry is recorded in the purchases journal as follows:

Date           Ledger                Description                    DR                     CR
09/05/15  COS-Materials      Lumber – Smith Job      $100.00
                 Discounts              Lumber – Smith                                       2.00
                 Cash Payment       Lumber – Smith                                     98.00
                                                                                     $100.00        $100.00

Notice both debits and credits are equal. This is an example (simple example) of a complex entry.

Now let’s take a look at an entry where both debits and credits have multiple lines of data. In this example the company purchases two pieces of equipment from the same company and paid some cash and used a long-term loan for the balance:

Date           Ledger              Description                                  DR               CR

09/08/15     F/A – Equip      Front End Loader                       43,000
                   F/A Trans         Loader Trailer 2T-4000                6,500
                   Cash                 Partial Payment                                                15,000
                   LT  Debt           Bal. of Payment 5/YR Note                             34,500
                                                                                               $49,500        $49,500

Again, notice both debits and credits are equal? Also, both debits and credits have multiple lines of information and that the respective ledgers are different.

Now let’s complicate this some more and illustrate a highly complex entry with multiple lines of both sides with multiple ledgers (accounts) and some of the ledgers are the same. Here is an example of a payroll entry:
                             PAYROLL JOURNAL
Date             Ledger                      Description                             DR                   CR
09/10/15       COS – Labor            Joe Smith 10 Hrs                  100.00

                     P/R Tax Expense      SS Match JS                             6.20
                     P/R Tax Expense      Medi Match JS                         1.45
                     P/R Tax Expense      FUTA/SUTA                            1.10
                     P/R Tax Liability      Fed Withholding JS                                         7.00
                     P/R Tax Liability      SS W/H JS                                                       6.20
                     P/R Tax Liability      Medicare W/H JS                                             1.45
                     P/R Tax Liability      State Income Taxes JS                                      3.00
                     P/R Tax Liability      SS Match JS                                                     6.20
                     P/R Tax Liability      Medicare Match JS                                           1.45
                     P/R Tax Liability      FUTA/SUTA Due JS                                        1.10
                     Cash – Payroll Acct  Net Check #3108 JS                                       82.35
                                                                                                    $108.75          $108.75

As stated before, both sides (debits and credits) are equal. Notice there are three payroll tax expense lines and seven payroll tax liability lines? This is done to keep the respective lines separated as each line is a function of a different tax.

With bookkeeping the payroll entry is usually the most complicated entry. It is rare to have a more complicated entry in a small business set of books.

This lesson teaches you that the dual entry system means that debits equal credits and the journal entry may have more than two lines of information. Multiple lines of entry even multiple lines for the same ledger account refers to a complex entry. ACT ON KNOWLEDGE.

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